Research & Advisory InternationalChallenges of the Energy and       Mining Sector
Ideology                                                      POLITICAL                                                   ...
Year            Era            Political Will1945-1950   Revolution         No, fighting a war1950-1957   Early Democracy ...
Mining in Indonesia is susceptible to crisis for variousreasons:1. Identified with environmental destruction2. Seen as sym...
Susceptibility to crises enhanced by characteristics ofmany mining companies:1. Not good at communicating2. Response to ac...
1. Land compensation issues (resolved   and unresolved)2. Environmental issues3. Industrial action4. Illegal mining5. Natu...
9.   Intercommunity rivalry and jealousy10. Intra-community rivalry and jealousy11. Employment12. Demands of local governm...
Origin          Mediation/Amplification                                      Organization     Resolution              Oppo...
6                                                     WHY                  1                                              ...
Central        Government Regional Government                        (Province/ Kabupaten)Business Association           ...
Stakeholder                                         Stakeholder                                        Stakeholder    Iden...
To whom does the organization have legal obligations?  Who might be positively or negatively be affected by the organizati...
1                  2                1                             3                 3                                     ...
    Menara Karya, 10th Floor Suite HJl. HR Rasuna Said Blok X-5 Kav. 1-2        Jakarta 12950 – INDONESIA                ...
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110303 nk rai presentation on mining

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Issues mining companies operating in Indonesia must be aware of.

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110303 nk rai presentation on mining

  1. 1. Research & Advisory InternationalChallenges of the Energy and Mining Sector
  2. 2. Ideology POLITICAL Governments WILL Public Opinion Political Attitude Perception of Good of Community GOAL: Policies and GOOD OF Strategies Economic, Social COMMUNITY and Political Circumstances 2(Danièle Barberis: “Negotiating Mining Agreements”)
  3. 3. Year Era Political Will1945-1950 Revolution No, fighting a war1950-1957 Early Democracy No, pressing concerns with nationhood1957-1966 Guided Democracy No!1966-1998 New Order Yes!1998-2005 Reformation Basically yes, but there are more pressing concerns2005-now (?) We’re trying to make up our mind 3
  4. 4. Mining in Indonesia is susceptible to crisis for variousreasons:1. Identified with environmental destruction2. Seen as symbol of capitalism3. Almost invariably involved in clash of cultures4. Extracting riches from the ground is emotional laden5. Viewed as associated with the excesses of the “New Order”6. The public does not differentiate responsible mining practice and illegal mining7. Rapidly changing social and political environment have direct impact on mining operations8. Regions demand bigger share of wealth 4
  5. 5. Susceptibility to crises enhanced by characteristics ofmany mining companies:1. Not good at communicating2. Response to accusations usually technical and defensive3. Insensitivity to cultural differences4. Culture of superiority5. Lack of empathy6. Reality of regional autonomy slow to sink in7. Mistaken view of the diminishing role of central government 5
  6. 6. 1. Land compensation issues (resolved and unresolved)2. Environmental issues3. Industrial action4. Illegal mining5. Natural disaster6. Community relations7. Community development8. Ethnic conflict 6
  7. 7. 9. Intercommunity rivalry and jealousy10. Intra-community rivalry and jealousy11. Employment12. Demands of local government13. Infrastructure use14. Technical failure15. Poor governance/ethics16. Divestment of shares (certain generations of CoW/CCoW) 7
  8. 8. Origin Mediation/Amplification Organization Resolution Opportunity to influence Difficult to influence Period of increasing  Formal constraints awareness Media CoveragePressure Issue Management Early issue identification Potential Emerging Current Crisis Dormant Development“Risk Issues and Crisis Management: A Casebook of Best Practice” – Michael Regester & Judy Larkin, 2005 8
  9. 9. 6 WHY 1 does this WHAT threaten the is the organization’s problem? ability to fulfill 5 its mission? WHO 2 WHERE is the target, is this for whom problem occurring? is it a problem? 4 3 HOW WHEN did this did this become a become a problem? problem?(Adapted from “Strategic Public Relations Management: Planning and Managing Effective Communication Programs,” Weintraub Austin, E. &Pinkleton, B.E., 2006) 9
  10. 10. Central Government Regional Government (Province/ Kabupaten)Business Association NGO Mass Media 10
  11. 11. Stakeholder Stakeholder Stakeholder Identification Analysis Engagement What corporate Who are our What are their social responsibilities do stakeholders? stakes? we have to our stakeholders? What What strategies, opportunities and actions, or challenges are decisions should presented by our we take to best deal with these stakeholders? responsibilities?(“The Pyramid of Corporate Social Responsibility – Toward the Moral Management of Organizational Stakeholders,” - Carroll, A. B., BusinessHorizons No. 34, 1991) 11
  12. 12. To whom does the organization have legal obligations? Who might be positively or negatively be affected by the organizations activities or decisions? Who manifested concern about the issues or impacts? Who has been involved in the past when similar concerns need to be addressed? Who can help the organization address specific impacts? Who can adversely affect the organization’s ability to meet its important objectives? Who would be disadvantaged if they were excluded from the engagement? Who in the value chain is affected? Who may have an impact on the reputation of an organization? Who may influence the policy and regulatory environment in which the organization operates? Who may impact on the value of the organization?(Adapted from “ISO 26000: Guidance on social responsibility.” November 2010 ) 12
  13. 13. 1 2 1 3 3 0 = Non-Stakeholder 1 = Latent Stakeholder 2 4 2 2 = Expectant Stakeholder 3 3 3 = Definitive Stakeholder 4 = Primary Stakeholder 1 2 1(“The Primordial Stakeholder: Advancing the Conceptual Consideration of Stakeholder Status for Natural Environment,” - Driscoll, C. andStarik, M. Journal of Business Ethics, Vol. 49, 2004)(“The Natural Environment as a Primary Stakeholder: the Case of Climate Change,” - Haigh, N. and Griffiths, A. Business Strategy and theEnvironment, Aug 2007) 28
  14. 14.  Menara Karya, 10th Floor Suite HJl. HR Rasuna Said Blok X-5 Kav. 1-2 Jakarta 12950 – INDONESIA T: +6221 5794 4694 F: +6221 5794 4696 info@kiroyan-partners.com www.kiroyan-partners.com

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